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Aquaculture Reports 5 (2017) 10–17

Contents lists available at ScienceDirect

Aquaculture Reports

jo u r n al homep ag e: www.elsev ier .com/ locate /aqrep

otential profitability of pearl culture in coastal communities inanzania

smail Saidia, Bill Johnstonb, Paul C. Southgatec,∗

Department of Aquatic Sciences and Fisheries, University of Dar-es-Salaam, TanzaniaQueensland Government Department of Agriculture and Fisheries, Maroochy Research Station, Nambour, Queensland 4560, AustraliaAustralian Centre for Pacific Islands Research and Faculty of Science, Health, Education and Engineering, University of the Sunshine Coast, Maroochydore,ueensland 4558, Australia

r t i c l e i n f o

rticle history:eceived 27 August 2016eceived in revised form8 November 2016ccepted 22 November 2016vailable online 2 December 2016

eywords:earl culturepat collectionoastal communitieslternative livelihoodsanzania

a b s t r a c t

Artisanal half-pearl culture has been shown to provide livelihood and economic opportunities for coastalcommunities in Tanzania that depend directly on exploitation of marine resources. However, these pilotresearch studies have been supported by donor organisations and the economic feasibility of such devel-opment has not yet been assessed. Furthermore, there is little understanding of the costs required toestablish pearl farms and the relative impacts of farm size on production, running costs, profitability andrisks involved in production. The aim of this study was to develop economic models for subsistence levelhalf-pearl culture in Tanzania. Models were generated for various scenarios relating to farm size andproducts (i.e. half-pearls and juvenile oyster or ‘spat’ collection) and they give detail on infrastructurecosts, operational costs and income generated for various levels of operation. We concluded that the mostprofitable model for community-based pearl farming is to culture at least 600 oysters for half-pearl pro-duction. However, for communities to be able to run a sustainable and profitable enterprise, developmentof a sustainable source of oysters is crucial. Farmers can also generate income from collection of juvenileoysters and their subsequent sale to pearl farmers, but this is less profitable than half-pearl farming and

requires a longer operational period before profits are made. Like pearl farming, there were major ben-efits or economies of scale with the largest farms tested providing greatest profit and/or a shorter timerequired to reach profitability. Our results provide a valuable source of information for prospective pearlfarmers, donors, funding bodies and other stakeholders, and valuable extension information supportingfurther development of pearl culture in Tanzania.

© 2017 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND

. Introduction

Coastal communities in Tanzania depend primarily on exploita-ion of coastal and marine resources for their livelihoods (Edward,009). Existing livelihood activities include artisanal fishing andangrove harvesting, agriculture of coconuts and cashews and

ubsistence farming. However, opportunities for further develop-ent of these activities are limited, and this increases exploitation

ressures on marine resources which are often harvested usingnsustainable methods such as dynamite fishing and beach sein-

ng (Andrews, 1998). As a result, natural resources remain inong-term decline against a background of increasing popula-ion. To address this underlying dependency on natural marine

∗ Corresponding author.E-mail address: psouthgate@usc.edu.au (P.C. Southgate).

ttp://dx.doi.org/10.1016/j.aqrep.2016.11.003352-5134/© 2017 The Authors. Published by Elsevier B.V. This is an open access article

/).

license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

resources, as well as poverty alleviation, two independent pilot-scale research projects were begun in 2003 to assess the feasibilityof developing pearl culture based livelihoods in poor coastal com-munities at Mafia Island and Zanzibar. They demonstrated that,after basic training, artisanal fishers could routinely produce mar-ketable cultured half-pearls (Fig. 1) and that pearl shell handicraftskills were readily adopted by pearl farmers and other commu-nity members (Southgate et al., 2006; Jiddawi, 2008). Production ofhalf-pearls and mother-of-pearl (MOP) handicrafts provides broadincome generating opportunities for coastal communities in Tan-zania (Southgate et al., 2006; Jiddawi, 2008), and half-pearl cultureis compatible with marine conservation efforts (Southgate et al.,2006). As a result of these successes, the World Wide Fund forNature (WWF) Tanzania Country Office oversaw the Rufiji-Mafia-

Kilwa (RUMAKI) Seascape Programme (2005–2012) which wasfunded by the European Union (EU-ReCoMaP) during the period2009–2011, to extend artisanal pearl culture activities to another

under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.

I. Saidi et al. / Aquaculture Reports 5 (2017) 10–17 11

Fig 1. Half-pearls grown inside the shell of Pteria penguin by pearl farmers at MafiaIsland, Tanzania. Pearls can be sold in the shell, with shell value based of the numberorp

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Table 1Infrastructure and production parameters used to develop economic models forhalf-pearl and spat farms in coastal Tanzania. Numbers in parentheses are the valuesused in the models.

Infrastructure parameters Production parameters

Number of rafts Cost per nucleusNumber of bamboo poles per

raft (20)Average number of nuclei peroyster (3)

Number of mangrove poles perraft (12)

Cost of glue per seeded oyster

Number of floats per raft (8) Cost of pearl seeding toolsNumber of anchors per raft (4) Time required to seed one

oyster (15 min)Number of rolls of rope per raft Number of seeded oystersMan hours to make one raft (4) Mortality of seeded oysters

(6.25%)Man hours to make anchors (1) Time to cleaning each oyster

(5 min)Man hours to deploy raft (3) Frequency of oyster cleaning (2

per month)Number of nets per raft (10) Cost of cleaning equipment

(brushes etc.)Cost of nets Culture period (9 months)Number of oysters per net (8) Proportion of unsellable pearls

(10%)Number of nets per raft (10) Proportion of sellable pearls

(90%)Man hours required to collect

oystersNumber of spat harvested

Cost of plastic containersCost of spat collector materialsMan hours to make spat

f pearls it contains, or cut from the shell for individual sale. If cut from the shell, theemaining pearl shell can be utilised for mother-of-pearl handicraft and jewelleryroduction.

7 community members at Mafia Island and 54 others in the Kilwaistrict of mainland Tanzania.

As well as half-pearl production, an associated coastal liveli-ood opportunity is provided by collection of juvenile pearl oystersr ‘spat’ that can be retained and grown for subsequent half-pearlroduction or sold directly to pearl farmers. Spat can be collectedy deploying appropriate materials (or ‘spat collectors’) into thecean at an appropriate time to provide a settlement substrateor pearl oyster larvae that are later removed as spat (Beer andouthgate, 2000; Southgate, 2008). Spat collection is a major sourcef income for coastal communities in French Polynesia (Southgate,008; Tisdell and Poirine, 2008) and has become an important sec-or in the pearl culture industry (Tisdell and Poirine, 2008). Spatollection is still at a very early stage as a means of income gen-ration in Tanzania, but it has considerable potential should pearlarming become established.

Although the livelihood benefits and potential of artisanal half-earl and MOP handicraft production in Tanzania have been brieflyeported (Southgate et al., 2006; Jiddawi, 2008), information onhe economic viability of these activities is very limited. Informa-ion on the set-up and running costs of pearl farms in Tanzaniand estimates of potential income generation from pearl produc-ion under various scenarios is not currently available. The aim ofhis study was therefore to develop economic models to assess theeasibility of artisanal half-pearl production and pearl oyster spatollection in Tanzania. Models were developed to represent variouscenarios relating to farm size and product (i.e. half-pearls and spatollection). They detailed infrastructure and establishment costs,perational costs and estimated potential income generation fromarious levels of operation over a 20 year horizon. The outputs fromhis research provide a valuable source of information for prospec-ive pearl farmers, donors, funding bodies and other stakeholders,nd valuable extension information supporting further develop-ent of pearl culture in Tanzania.

. Materials and methods

.1. Modelling software and analysis

Economic models were developed using Microsoft Excel and

ased upon cost-benefit analysis techniques. The modelling soft-are used in this study was adapted from existing softwareeveloped by Johnston and Ponia (2003) for analysis of culturedound-pearl production in Pacific island countries (e.g. Tisdell and

collectorsNumber of spat collectors (50)

Poirine, 2008; Hine and Johnston, 2013; https://publications.qld.gov.au/dataset/agbiz-tools-fisheries-aquaculture). For this studychanges were made to existing software to account for differ-ences between round pearl and half-pearl production methods andcycles, and differences in inputs, input costs and infrastructure andproducts (i.e. half-pearl and spat), between the Pacific and Tan-zania. The revised software was used to analyse data from inputsrelated to farming costs (establishment of farm and maintenance),the estimated quantity of half-pearl and spat produced, and valueof products (half-pearls and spat). From these data, the softwaregenerated information on annual gross revenue, annual produc-tion costs, and production costs and revenue per product. Otherinformation generated by this analysis included net present value,annual return and benefit-cost ratio for both half-pearl and spatcollection. A discounted cash flow analysis was used to determinethe annualised cost structure and likely profitability. The timingand duration of these projects has an influence on the annualisedcosts and revenues of the project. The single amount calculatedusing compound interest method is known as present value (PV)of the future stream of costs and benefit. The rate used to calcu-late present value is known as the discount rate (opportunity costof funds). All the models developed assumed a project life of 20years and used a real discount rate of 5 per cent to calculate the netpresent value (NPV).

Data inputs to the spreadsheet-based models included the costsassociated with raft-based farming infrastructure (e.g. bamboopoles, ropes, floats, anchors, etc.), pearl production and husbandry(e.g. oyster nets, pearl nuclei and glue, pearl seeding tools, spat col-lector materials etc.) and labour (Table 1). Values for all economicparameters (outputs) were calculated from value entered. The sum-mary statistics also provide a breakdown of input costs per product

(i.e. per pearl or per spat) which allowed the major input costs tobe identified. Another feature of the model is the application ofrisk analysis (Johnston and Ponia, 2003). Risk and uncertainty arefeatures of most business and government activities and need to

1 ture Reports 5 (2017) 10–17

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Table 2Output summary and economic indicators generated for the three half-pearl farmingscenarios assessed in this study; based on farms with 200, 400 and 600 oysters.

Half-pearl farming scenarios

200 400 600

Output summaryAnnual production (half-pearl) 684 1368 2052Annual gross revenue $4275 $8550 $12,825Annual production costs $963 $1672 $2401Production costs per half-pearl $1.41 $1.22 $1.07Revenue per pearl $6.25 $6.25 $6.25

Economic indicatorsNet present value $41,280 $85,712 $132,422Annual return $3312 $6678 $10,626

2 I. Saidi et al. / Aquacul

e understood to ensure rational investment decisions. The mod-ls include a five-point distribution risk analysis that accounts forisk associated with production (e.g. weather events, environmen-al stressors, disease and predation, pollution, theft, oyster supply,echnical skill variability) and revenue streams (e.g. exchange rates,

arket variability, tourism flows, increased international compe-ition, quality issues associated with product, domestic marketompetition, global economic shocks etc.) that delivers a cumula-ive probability distribution of profit (NPV) of a possible 200 annualroduction outcomes given the risk parameters identified. Devel-pment of the risk profile was informed by a decade of research inusiness skilling with pearl farmers in south Pacific countries and isirectly applicable to these scenarios in Tanzania. Values shown inhis study are Australian dollars (AUD) and values were calculatedrom actual costs in Tanzanian Shillings (TZS) using an exchangeate of 1 AUD = 1,506.55 TZS.

.2. Data collection

Data for spat collection and pearl culture were collected fromearl farmers at Mafia Island and in the Mtwara region, respec-ively. At Mafia Island, three group members work as a cooperativehere they perform all activities together as a unit including spat

ollection, oyster collection, raft making, seeding for pearl produc-ion, oyster care, pearl harvesting and marketing. When they makeearl sales, they share the revenue equally. In the Mtwara region,ata for cultured half-pearls were collected from a pearl farmerrom Mngoji village in the Mnazi Bay-Ruvuma Estuary Marine ParkMBREMP) in Mtwara Rural District. At both sites, production ofultured half-pearls depends on wild-collection of adult black-lipearl oysters, Pinctada margaritifera. However, unlike pearl farmerst Mafia Island, who have access to commercially available nucleio make their pearls, the farmer at Mngoji village uses plastic hemi-pherical earring buttons as half-pearl nuclei.

The data used in this study to generate economic models werectual operational costs and production data from establishedpat farming and half-pearl farming activities at Mafia Island andtwara, respectively. The infrastructure and production parame-

ers used to develop the economic models are shown in Table 1ith some input values. Infrastructure costs differed between Mafia

sland and Mtwara for similar items and these differences werencorporated into the respective models. For example, farming atoth sites is raft-based, but farmers at Mafia Island utilise bamboooles in raft construction while local mangrove poles are used forhe same purpose at Mtwara. ‘Man hours’ were costed at a standardate of TZS 1430 per hour (=AUD $0.95) for both the half-pearl farmnd spat farm models.

.3. Economic models

.3.1. Half-pearl farm scenariosEconomic models were developed for three different sizes of

alf-pearl farm in Tanzania. Scenario 1 represents the current farmize at Mtwara and for the purpose of modelling, the farm sizeas doubled (scenario 2) and tripled (scenario 3). Thus, scenario

is a family-owned farm with 200 oysters producing half-pearls;cenario 2 is a family owned farm with 400 oysters producing half-earls; and scenario 3 is a family owned farm with 600 oystersroducing half-pearls.

.3.2. Spat collection farm scenariosEconomic models were developed for current pearl oyster spat

ollection methods used at Mafia Island, where one spat collectionarm utilises 50 individual spat collectors, composed of 1-m2 of 50%hade cloth held within 6 mm pore size mesh ‘onion bags’, that areuspended from a bamboo raft at a depth of 2–3 m. Spat collectors

Benefit-cost ratio 4.44 5.11 5.83

Farm establishment costs $702 $1052 $1472

are deployed for one year before juvenile oysters are removed forculture. This study determined the economic impacts of varyingnumbers of spat recruiting to spat collectors. On this basis, eco-nomic models were generated for recruitment scenarios of: (1) 10spat per collector; (2) 25 spat per collector; and (3) 50 spat percollector.

2.3.3. AssumptionsThe economic modelling undertaken in this study made the fol-

lowing assumptions:

• farmers do not pay themselves regular wages or salaries whenthey work at their farms but use money from pearl sales to sup-port family needs via drawings;

• drawings are not annual and the level of drawings varies fromyear to year – on this basis drawings were excluded from analysesand the potential profits estimated from our analyses excludedrawings;

• farmers use some locally available materials for farm infrastruc-ture – e.g. bamboo and mangrove poles. In our models suchmaterials were costed (Table 1);

• a single farmer can maintain one raft housing 200 oysters – themodel considered that each additional raft with oysters wouldneed another person employed;

• no extra transport (canoe) would be needed for up to three raftsbecause one canoe can carry up to three people able to servicethree rafts simultaneously; and

• that 90% of pearls produced are able to be sold at an average priceof TZS10,000 (= AUD $6.64) per pearl; these figures are based onaverage production data from the farm and a ‘standard’ local pearlprice.

3. Results

3.1. Half-pearl models

The output summary and economic indicators generated for halfpearl farming models are show in Table 2. The results indicate thata farm of 200 oysters held on one raft has a net present value of$41,280 and an annual return of $3312 over a 20 year productionperiod. The benefit-cost ratio of such a farm was 4.44 (Table 2) andthe capital required to establish the farm was estimated to be $702.The production cost per pearl was estimated at $1.41 and this wascomposed of nuclei ($0.58) labour ($0.39) and capital ($0.21) as the

major input costs (Table 3). While capital and labour are relativeflexible, reducing the cost of nuclei could be used as a means ofimproving profitability. Fig. 2 shows discounted cumulative cashflow for a 200 oyster half-pearl farm for 20 years of production. The

I. Saidi et al. / Aquaculture Reports 5 (2017) 10–17 13

Fig. 2. Discounted cumulative cash flow for a 200 oyster half-pearl farm (top), a 400 oysteproduction period. Values shown are Australian dollars (AUD) based on an exchange rate

Table 3Relative contributions of the different components of half-pearl production costsfrom pearl farms holding 200, 400 or 600 oysters.

Component Cost per pearl

200 400 600

Capital 0.21 0.16 0.15Operating costs 0.15 0.07 0.04Farm 0.05 0.04 0.03Farm labour 0.39 0.34 0.30Other costs 0.03 0.02 0.02Nuclei 0.58 0.58 0.53

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some indication of the effects of economies of scale. Discountedcumulative cash flow for a 400 oyster half-pearl farm over a 20

Total $1.41 $1.21 $1.07

arm shows a positive discounted cumulative cash flow in the first

r half-pearl farm (middle) and a 600 oyster half-pearl farm (bottom) over a 20 year of 1 AUD = 1,506.55 Tanzanian Shillings (TZS) at the time of the study.

year of production and a steady annual increase over the 20 yearproduction cycle to a value of $41,280 in year 20 (Fig. 2).

A half-pearl farm utilizing 400 oysters generated an estimatednet present value of $85,712, an annual return of $6678 and abenefit-cost ratio of 5.11 over a 20 year production period (Table 2).The capital required to establish this farm was estimated to be$1052. Production costs per pearl, from a farm with 400 oysterswere also dominated by the cost of nuclei ($0.58) followed byfarm labour ($0.34) and investment capital ($0.16) (Table 3). How-ever, the contributions of farm labour and investment capital wereslightly lower than for a farm with 200 oysters (Table 3), giving

year production period indicates that profits will again be made inthe first year of farm operation (Fig. 2). Discounted cumulative cash

14 I. Saidi et al. / Aquaculture Reports 5 (2017) 10–17

Table 4Risk analysis for three half-pearl farming scenarios assessed in this study based onfarms with 200, 400 and 600 oysters. Further detail of the risk assessment for the600 oyster farm is shown in Fig. 3.

Half-pearl farming scenarios

200 400 600

Risk profile 73% 58% 35%Lowest return −$568,297 −$388,816 −$155,150Highest return $48,125 $127,120 $233,390

Table 5Cash flows for half-pearl farm with 600 oysters over a production period of 20 years.

Year Annual CashFlow

Discounted CashFlow

DiscountedCumulative

0 −$1472 −$1472 −$14721 $10,742 $10,230 $87582 $10,742 $9743 $18,5023 $10,742 $9279 $27,7814 $10,742 $8837 $36,6185 $10,742 $8417 $45,0356 $10,742 $8016 $53,0517 $10,742 $7634 $60,6858 $10,742 $7270 $67,9569 $10,742 $6924 $74,88010 $9336 $6595 $81,47511 $10,742 $6281 $87,75612 $10,742 $5982 $93,73713 $10,742 $5697 $99,43414 $10,742 $5425 $104,85915 $10,742 $5167 $110,02616 $10,742 $4921 $114,94717 $10,742 $4687 $119,63418 $10,742 $4464 $124,09819 $10,742 $4251 $128,34920 $10,807 $4073 $132,422

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Table 6Output summary and economic indicators generated for the three spat collectionfarming scenarios assessed in this study; based on collection of 10, 25 and 50 oystersper collector.

Spat collection scenarios

10 25 50

Output summaryAnnual production (spat) $475 $1188 $2373Annual gross revenue $333 $831 $1663Annual production costs $826 $794 $1273Production costs per spat $1.74 $0.67 $0.54Revenue per spat $0.70 $0.70 $0.70

Economic indicatorsNet present value −$4845 $366 $3827Annual return −$493 $37 $390Benefit-cost ratio 0.40 1.05 1.31

Table 7Relative contributions of the different components of spat production (per spat) forspat collection farms collecting 10, 25 and 50 spat per collector.

Component Cost per spat

10 25 50

Capital 1.64 0.63 0.51Repair/Maintenance 0.07 0.03 0.02Farm labour 0.03 0.01 0.01

collection farm models which showed risk profiles of 87% and 76%,respectively (Table 8). Production costs per spat, were made up pri-

ow is greater for the 400 oyster farm than the 200 oyster farm andhis pattern continues throughout the projected 20 year productioneriod.

A larger 600 oyster pearl farm was estimated to have a netresent value of $132,422, an annual return of $10,626 and aenefit-cost ratio of 5.83 (Table 2). The capital required for a farmf this size was estimated to be $1472. Pearl production costs for

farm this size included nuclei ($0.53), farm labour ($0.30) andnvestment capital ($0.15) as the major contributors (Table 3). Dis-ounted cumulative cash flow for a 600 oyster half-pearl farm over

20 year production period showed that profit will again be maden the first year of farm operation and this will be larger than thoseredicted for farms with 200 oysters and 400 oysters (Fig. 2). Auperior discounted cumulative cash flow to both the 200 and 400yster farms was also estimated throughout the projected 20 yearroduction period (Fig. 2). The risk profile for a given farming sce-ario is determined as the point where the cumulative probabilityistribution curve intersects the zero profit line (Fig. 3). Therefore,

600 oyster farm showed a 35% probability of making zero profitr less (or a 65% probability of making a profit greater than zero)ith a lowest potential return of −$155,150 and highest potential

eturn of $233,390 (Fig. 3, Table 4). Smaller pearl farms with 200nd 400 oyster showed higher probabilities (73% and 58%, respec-ively) of making zero profit (or losses) with increased potentialegative returns and inferior potential highest returns (Table 4).nnual cash flow, discounted cash flow and discounted cumula-

ive cash flow for a half-pearl farm with 600 oysters over a 20 yearroduction period is shown in Table 5.

Total $1.74 $0.67 $0.54

3.2. Spat collection models

The output summary and economic indicators generated forspat collection farming models are shown in Table 6. Under theassumption made by this model, a community-based spat col-lection farm composed of one raft with 50 spat collectors, eachcollecting 10 spat every year, that are cultured in a single nurs-ery raft before being sold to pearl farmers has large negative cashflows during the first 20 years of production and would requiremore than 20 years to pay back the investment capital and startmaking profit (Fig. 4). Economic indicators of such a farm for a pro-duction period of 20 years show a net present value of −$4845, anannual return of −$493, a benefit-costs ratio of 0.4 (Table 6) and anegative cash flow throughout the projected 20 years of production(Fig. 4). Major production costs per spat, included capital ($1.64),repair and maintenance ($0.07) and farm labour ($0.03) (Table 7).

A similar spat collection farm composed of one raft with 50spat collectors, each recruiting 25 spat each year was predicted torequire 15 years of production to break even and start making profit(Fig. 4). The economic indicators of this spat collection farm mod-elled for a production period of 20 years indicated the net presentvalue to be $366, an annual return of $37 and a benefit-costs ratioof 1.05 (Table 6). Production costs per spat, were made up primarilyof capital ($0.63), repair and maintenance ($0.03) and farm labour($0.01) (Table 7). This farm has lower production costs per spat thanthe smaller spat collection farm (Tables 6 and 7).

A more successful spat collection farm recruiting 50 spat percollector each year will require 4 years of production to pay backthe investment capital and begin making profit (Fig. 4). The eco-nomic model for such a farm over a production period of 20 yearsindicated the net present value of $3827, an annual return of $390and a benefit-costs ratio of 1.31 (Table 6). Such a farm showed arisk profile with 54% chance of making zero profit or less with thelowest return of −$1060 and highest return of $1036 (Fig. 5). Thisrisk assessment compared well to those for the two smaller spat

I. Saidi et al. / Aquaculture Reports 5 (2017) 10–17 15

Fig. 3. Risk assessment for a 600 oyster half-pearl farm. The point at which the cumulatfarm has a 35% chance of making zero profit or less, with a lowest potential return of −$1shown are Australian dollars (AUD) based on an exchange rate of 1 AUD = 1,506.55 Tanza

Table 8Risk analysis for the three spat collection farming scenarios assessed in this study;based on collection of 10, 25 and 50 oysters per collector. Further detail of the riskassessment for the 50 spat per collector scenario is shown in Fig. 5.

Spat collection scenarios

10 25 50

Risk profile 87% 76% 54%

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Lowest return −$1695 −$1429 −$1060Highest return $227 $463 $1036

arily by capital ($0.51), repair and maintenance ($0.02) and farmabour ($0.01) (Table 7).

. Discussion

All three half-pearl farming scenarios modelled in this study200, 400 and 600 oysters) recovered investment capital and maderofit (break-even) in the first year of production. Our results indi-ate that pearl farms with 600 oysters grown using three rafts ishe best of the three models tested as it generates superior revenuen the first year of production than farms with 200 and 400 oysters.his farm type could be appropriate for family operated venturesnd cooperatives whose members work together and share rev-nue after sale of products. Cooperatives may be ideally composedf three farmers because the experience of current pearl farmers intwara indicates that 200 oysters can be managed by one person

ut a greater number of oysters will need additional employees toanage them.Smaller farms of 200 or 400 oysters could be best suited to

ndividuals and small families. Although both farming modelsreak-even in their first year of production, they generate less rev-nue than would be required to support a large family. Also, theevel of income generated is unlikely to be sufficient to allow someavings to support future farm re-investment and operation. Expe-ience from an existing family operated farm, with 200 oysters,hows that pearl sales provide sufficient revenue for family needsith a little left over to be saved for emergencies and future farm

peration (M. Mkwamba, pers. comm., 2014). Our results indicatehat there is scope for farmers tending small pearl farms to reinvestn pearl farming infrastructure and increase farm size over time.his is likely to be an attractive use of income from pearl farm-ng given the relatively low capital requirements of small pearl

arms. The same pearl farmer also reported that he managed toonstruct a new house using revenue from pearl sales that wasccumulated over a two year period when he had no large financialesponsibilities with the family (e.g. children were not in school).

ive probability distribution curve intersects the zero profit line indicates that this55,150 and highest potential return of $233,390 for 20 years of production. Valuesnian Shillings (TZS) at the time of the study.

Although the results of this study indicate that farms with 600oysters offer the best option for pearl farming in Tanzania, thereare some issues that prospective pearl farmers and funding organi-zations need to consider. The first is the relatively high investmentcapital required to establish and operate such a farm, estimatedat $1472. This is a large sum of money by local standards whichfew prospective pearl farmers in Tanzania could manage. This sumwould also be difficult for many communities to generate unlesssupported by a donor funding organization. On this basis, it maybe better for farmers to establish themselves in pearl farmingwith smaller scale farms that enable them to generate the capitalrequired to expand their farms over time.

The second issue that needs to be considered is the availability ofoysters to new farms. Currently, pearl farming at Mafia Island, Zanz-ibar and Mtwara is based on collection of wild oysters (Southgateet al., 2006) and studies have indicated that this approach maybe unsustainable in places where wild collection is not properlymanaged (Southgate, 2008). For example, Sims (1993) reportedthat over-harvesting of Pinctada margaritifera reduced wild stocksto below a self-sustaining level in the Cook Islands and Kiribati.Currently, adult oysters are scarce in some areas of Tanzania dueto prior unsustainable collection for food and shells (mother-of-pearl). The shell business has now ceased, but oysters are stillcollected as a source of protein. If not properly managed, wild col-lection of oysters in Tanzania could lead to a similar situation tothose experienced in the Cook Islands and Kiribati. Wild collectionof adult oysters for half-pearl culture is an unsustainable practiceespecially where many farmers may have to share the resource.Establishment of reliable spat collection programs will thereforebe an important basis for future development of community-basedpearl culture in Tanzania, and prior research has reported thatit is possible to collect sufficient P. margaritifera spat to supportpearl culture activities at some sites along the Tanzanian coast(Ishengoma et al., 2011).

Another issue to be considered by prospective pearl farmers isrisk. Our modelling showed that while the potential annual returnof a 200 oyster pearl farm was estimated at $3312 there is a highchance (73% of the time) of making a zero profit or loss. The poten-tial annual return of a 600 oyster pearl farm was estimated at morethan three times that of the 200 oyster farm ($10,626) while the riskof a zero profit or loss was more than halved (35%). So while largerpearl farms have clear advantages over smaller farms in terms ofreducing the risk of making a zero profit or loss, our results indicate

important to note, however, that the farmer from Mtwara involvedin this study had made annual profits from his 200 oyster pearlfarm for ten consecutive years. Our results indicate, however, that

16 I. Saidi et al. / Aquaculture Reports 5 (2017) 10–17

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ste

ig. 4. Discounted cumulative cash flow for spat farms collecting 10 spat per collecroduction period. Values shown are Australian dollars (AUD) based on an exchang

ncreasing farm size above 200 oysters will not only improve annualeturns but reduce the risk of zero profit. In Pacific island countries,isk profiles for pearl farms and spat farms generally improve ashe experience and skills of farmers improve. Improved technicalnd husbandry skills that increase production, improve productionfficiency and product quality, and improve sales and marketing,or example, result in a shift in the cumulative probability distribu-ion to the right (Figs. 3 and 5), which in turn reduces the chancef making zero profit or loss.

Economic modelling of three scenarios of community-basedpat collection not surprisingly showed that the best option washat recruiting the greater number of spat (50 per collector). How-ver, this farming scenario still required 4 years to break-even and

p), 25 spat per collector (middle) and 50 spat per collector (bottom) over a 20 year of 1 AUD = 1,506.55 Tanzanian Shillings (TZS) at the time of the study.

to begin making profit. The profitability of such a venture is sensi-tive to market price, spat collection success, mortality rate due todiseases and predation, storms and theft, and few farmers wouldhave the means to be able to run such a farm at a loss for three con-secutive years before making profit, because of underlying povertyand lack of capital for investment. While it is possible for financialinstitutions to provide loans to farmers, they would need regis-tered properties to use as bonds, which most prospective farmersdo not have. Farmers own land and local houses in their villages but

these are unregistered and do not qualify as bonds with financialinstitutions in Tanzania. Rapaport (1996) reported that when com-munity members in French Polynesia acquired loans to invest inpearl farming, many failed to pay back their debts because of lack of

I. Saidi et al. / Aquaculture Reports 5 (2017) 10–17 17

F hich tt ial retV 506.55

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Tisdell, C., Poirine, B., 2000. Socio-economics of pearl culture: industry changes

ig. 5. Risk assessment for a spat farm collecting 50 spat per collector. The point at what this farm has a 54% chance of making zero profit or less with a lowest potentalues shown are Australian dollars (AUD) based on an exchange rate of 1 AUD = 1,

nancial and business knowledge relating to budget management.f provided with loans, Tanzanian half-pearl farmers would requireoncurrent training in basic business skills that would better equiphem to manage a pearl farm budget.

Recruitment of pearl oysters to spat collectors is influenced byeveral factors including reproductive seasonality, location, spatollector type, immersion time and depth, weather phenomena etc.armers could increase spat collection success through deploymentf appropriate spat collectors (e.g. Gervis and Sims, 1992; Haws,002; Southgate, 2008) to the ocean to coincide with periods ofatural recruitment (Coeroli et al., 1984; Southgate, 2008). Spatollection success may also be enhanced when spat collectors areeployed in areas with large numbers of adult oysters and whereushing of sea water is low (Tisdell and Poirine, 2000).

Tanzania is fortunate to enjoy significant tourism and gem-tone production industries. The former generates a large potentialomestic market for pearl products. Furthermore, the tourismarket is stratified from back-packers through to high-end safari

ourist, and this provides an excellent opportunity to market pearlroducts of varying quality, ranging from pearl handicrafts througho high-value pearl jewellery items. However, the size of the poten-ial domestic market for pearl products in Tanzania is unknown andhis should be a priority for future research. Tanzania’s gemstonendustry has well established domestic and international networkshat may be beneficial should large-scale pearl production becomestablished in the country.

. Conclusions

The economic models developed by this study are primarilyimed to assist farmers, potential investors and funding organiza-ions in Tanzania to understand the economic requirements, costsnd benefits, and risks involved in half-pearl production, and toelp develop a sustainable and profitable enterprise. They can alsoe used to estimate the impact of various management decisions.or example, the farmer may wish to know how drawing wages willffect his profit, or how the use of more expensive pearl nuclei willffect production costs and profit. Under the assumptions made byhe models, this study concludes that it is most profitable for indi-iduals and community groups to culture at least 600 oysters foralf-pearl production. For communities to be able to run a sustain-

ble and profitable enterprise that involves a number of communityembers in half-pearl culture, development of a sustainable source

f oysters is crucial. However, spat collection in Tanzania is lessrofitable than half-pearl farming and requires a longer operational

he cumulative probability distribution curve intersects the zero profit line indicatesurn of −$1060 and highest potential return of $1036 over 20 years of production.

Tanzanian Shillings (TZS) at the time of the study.

period before profits are made. Like pearl farming, there were majorbenefits or economies of scale with the largest spat farms testedproviding greatest profit and/or a shorter time to reach profitability.

Acknowledgements

This research was supported by the Australian Centre forInternational Agricultural Research (ACIAR) project FIS/2012/069‘Technical support for pearl culture in coastal Tanzania’ led by PCS atthe University of the Sunshine Coast. The first author was supportedby a Scholarship from AusAID. We acknowledge the constructivecomments of two anonymous reviewers that improved this paper.

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